Blog

Stock in Transit

by Gary Byrne

December 16, 2011

It’s nine days before Christmas, and all through the stores, people are wending their way through aisles looking for the perfect gift for their loved ones — or maybe they are showing signs of panic and grabbing items of the shelves and racks in order to have something before everything is gone.

I’ve been among shoppers in the stores this week, and I looked at my share of labels while shopping for clothes for my wife. I can’t help noticing that almost all the clothes I’ve looked at come from China. I’m commenting on the foreign-made items not to underscore the lack of products manufactured in the US, but because I am curious about the complexities that financial analysts at retailers face while tracking the status of orders originating from China and other countries in the Asia/Pacific region. While shoppers are roaming through the aisles, the finance team is walking a tight rope with Profitability Analysis (CO-PA) on one side and financial accounts on the other.

In her article for Financials Expert titled “Capture the Value of Stock in Transit Using a New Business Function in Enhancement Package 5,” Janet Salmon describes a sale process as one that consists of three steps: “create a sales order, create a delivery with reference to the sales order, and invoice for the de livered goods.” She adds that “handling the potential time gap between the goods issue and the invoice has long been an issue for organizations trying to keep their financial accounts and Profitability Analysis (CO-PA) in sync. SAP has provided a solution to the timing gap with enhancement package 5 for SAP ERP 6.0. It provides a way to value goods that have left the sending company but that have not arrived at the receiving company.”

In her article, Janet uses the concept of stock in transit to explain processes called cross-company stock transfers (CST) and intracompany stock transfers (IST). She defines stock in transit as “a special stock type to handle goods that have been issued from the factory and are en route either to another factory or to the final customer. Its purpose is to provide visibility into the quantities of goods en route and the value of this inventory, to handle the ownership of the stock (sender plant or receiver plant), and to support the process of returning damaged goods at the correct value.”

Enhancement package 5 for SAP ERP 6.0 includes functionality that allows users to handle stock transfer processes regardless of whether they are intracompany or cross-company transfers. In her article, Janet uses an example of a Chinese company selling goods to a US company. She explains how to use the material ledger to track postings pertaining to various stages of stock transfers, how to activate schedule line categories for a CST, how to use new settings for stock in transit, how to check settings for stock in transit, and how to use settings for a returns process when designing a stock transfer process.

If you’re part of a finance management team at a retailer, I hope you’re using enhancement pack 5 for SAP ERP 6.0. Maybe you’ll track your stock in transit more efficiently and have more time to join the res t of the shoppers looking for that perfect gift.

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